Daljeet Kohli has conducted a review of the stocks in his Model Portfolio. The performance is quite impressive. The ‘aggressive’ portfolio has surged ahead with an awesome return of 53.5%. It is followed by the ‘conservative’ portfolio with 46.1% return and the ‘balanced’ portfolio with 44.5%. All three have comfortably beaten the benchmark return of 30.7% by a wide margin.
Daljeet has recommended an addition to the balanced portfolio in the form of the blue chip behemoth Infosys. He has given a detailed explanation of his rationale but the bottom-line is (i) the valuations at 12 times FY16E EPS is very attractive. Historically, whenever, Infosys has breached that level, it has always surged back; (ii) the outlook for the InfoTech industry is positive in the light of growth in the developed markets and (iii) there is a continuous expansion in the margins.
The best part is that Daljeet has foreseen a target price of Rs. 3,952 for Infosys (FY 16.4x FY16 EPS) which means a whopping 32% gain from the CMP of Rs. 2,979.
Personally, I see merit in Daljeet Kohli’s advice. In the last three months, the stock has lost 20% over concerns relating to the exodus of its top brass and the strengthening of the rupee. However, there is no doubting Infosys’ pedigree as a blue chip powerhouse stock. The problems that it is facing presently look temporary in nature. Such problem situations are an opportunity for long-term investors to load up on the stock. Also, the valuations (14.7xFY15E) are at a level from where one can say that the downside is limited. Further, Infosys is the kind of stock where one can put large sums of money without having to look over one’s shoulder for lurking dangers. So, I am quite tempted to add the stock to my portfolio.